By ALESSANDRO VOLPI*
Donald Trump's victory would be a true financial earthquake, institutionally motivated, that would force "the masters of the world" to deal with politics
Following the announcement of Joe Biden’s withdrawal from the presidential race, a conflict within American financial capitalism has been emerging with increasing clarity. I will attempt to summarize and perhaps even simplify it here.
Following the selection of James D. Vance as vice-presidential candidate and the decision by Elon Musk to take a stand, the ranks of Donald Trump’s supporters (and financiers) have been growing. This can be attributed to a segment of capitalism that seeks to contain the excessive power of the Big Three, namely the super funds Vanguard, Black Rock and State Street, now decidedly linked to the Democrats.
Both Joe Biden and Kamala Harris have had and have key figures on their teams who come from Black Rock. A figure like Jamie Dimon, the CEO of JP Morgan, the banking super fund long courted by Donald Trump, is about to be enlisted by the Democrats. Donald Trump’s appointed Federal Reserve Chairman Jerome Powell, with the support of Democratic Treasury Secretary Janet Yellen, has followed the strategies of the same super funds, buying their ETFs [Exchange-traded Funds, exchange-traded investment funds that track the performance of the NDR index ̵ Net Dollar Retention].
The Trumpist Condominium
Faced with this symbiosis, a group of figures has formed who want to use the political power of Donald Trump's presidency to combat or limit the excessive power of the Big Three. Among this group are some large investment funds: hedge, such as John Paulson, worried about his progressive marginalization in a “market” dominated by super funds, some oil companies not directly linked to the energy giants already in the hands of the Big Three — such as Timothy Dunn and Harold Hamm of Continental Resources —, as well as long-standing billionaires like the Mellons, irritated by the excessive power of Larry Fink (CEO of Black Rock), in addition to characters like Bernie Marcus, founder of Home Depot, a giant with 500 thousand employees, hostile to the factoryless model of big tech, whose creation was sold by Vanguard, Black Rock and State Street.
Among Donald Trump's capitalists are also casino owners, such as Steve Wynn and Phil Ruffin, frightened by the advance of large funds even in their sectors, as well as typical characters from the Trumpist world, such as Linda McMahon, founder, together with her husband, of the wrestling and sports promotion company World Wrestling Entertainment. In short, the possibility of Donald Trump's success has ended up triggering a severe shock within American capitalism, which could provoke a change in its internal balance and even weaken it.
By chance, when we look at the list of Kamala Harris's financiers, we find numerous financial figures linked, to varying degrees, to large funds. In fact, names such as Reid Hoffman, creator of LinkedIn, which was sold to Microsoft in 2016 for 26 billion dollars, stand out. Since then, he has been a member of the Board of Directors of Microsoft itself, of which, as we know, Vanguard, Black Rock and State Street control more than 20%.
The same Reid Hoffman today holds a significant stake in Airbnb, where the Big Three are the main shareholders. Alongside Hoffman is Roger Altman, a longtime Democratic financier who has worked with Jimmy Carter and Bill Clinton in subtle roles and has worked in the holding Lehman Brothers, through the Blackstone group, and is currently director of Evercore bank, of which Vanguard holds 9,46%; Black Rock, 8,6%; and State Street, 2,6%.
In addition, we have Reed Hastings, chairman of Netflix, where Vanguard has 8,5%; Black Rock, 5,75%; and State Street, 3,8%. And we also have Brad Karp, a longtime trusted lawyer at JP Morgan; Ray McGuire, chairman of Lazard Inc, where Vanguard is the largest shareholder, with 9,5%, followed by Black Rock, with 8,5%. We also have Marc Lasry, CEO of Avenue Capital Group, the investment fund hedge close to the Big Three, and Frank Baker, owner of a private equity. A prominent place among Kamala Harris' donors is occupied by several members of the Soros family and several protagonists of the main American consulting firms, such as Jon Henes and Ellen Goldsmith-Vein.
In short, the new candidate has brought together a vast consortium of donors who see the prospect of Trumpist finance as a threat to the “reassuring” monopoly carefully cultivated by the super funds, key shareholders of the main companies in the Standard & Poor's 500 index. This consortium can be seen as a defense force for the major players in global asset management and the shareholdings of those giants, against potential shocks caused by a Republican victory, even if under the aegis of “cross-cutting” conditions.
The “short rein” on Kamala Harris
Kamala Harris presented herself in North Carolina as the sponsor of a program to defend the middle class — identified as those with annual incomes of up to $400 —, committed to an initiative to support affordable housing and signaling a strategy to contain price speculation. In short, a very generic program, which the Democratic candidate defined as the “opportunity economy”. The insinuation of an initiative to prevent price speculation, however, scared the Big Three, who had invested in the Democrats, aiming to avoid “another capitalism” domiciled in the Trump clan.
Thus, the New York Post came out shortly after August 15, with a loud headline in which Harris was defined as a “communist” precisely because she wanted to control prices and increase federal spending. In this regard, it is worth noting that the New York Post is owned by News Corp., whose shareholding includes Rupert Murdoch and the Big Three, the latter with more than 20% control. It seems clear that the super funds were quick to use a vehicle known to be Trumpist to make Kamala Harris understand what she cannot do. In practice, she cannot make policy against the monopoly of speculation. In fact, some people even think that Kamala Harris is even a bit of a “communist”.
Interested misunderstandings
No La Repubblica, from Rome, on August 21, 2024, Paolo Mastrolilli interviewed, with great satisfaction, Bernie Sanders, “the only socialist senator” in the United States. Mastrolilli’s satisfaction was the result of Sanders’ declaration of convinced, almost adoring, support for Kamala Harris. Assuming that Donald Trump is a dangerous fascist, Bernie Sanders praised Joe Biden, the most “progressive” president in modern US history, and urged people to vote for Kamala Harris to continue her work.
Of course, Bernie Sanders added, we will have to overcome the resistance of the 1 percent of the population, the super-rich, who, he frankly argued, “have never had it so good.” Is it because recent presidents have done everything they can to make their lives easier? Bernie Sanders wrote a book about the American economic system, attacking the big funds. It seems that somewhere along the way he suffered a lapse of forgetfulness.
We are therefore in fact facing an internal conflict between a capitalism that, on the one hand, builds its fortune on the financial monopoly (understood as a tool to reduce the risk for citizens who, by now, would ideally have become financial subjects, through its policies), and, on the other, we see the formation of a bloc that aims to weaken that monopoly, in the hope of not being excluded from the inflating bubble, but which needs policies, starting with monetary policy, with decidedly more favorable rates, that it can use. Beyond the trivial popular narratives, these elections involve a fierce war between financial groups.
The Democrats’ political and economic strategy has been very understandable so far. Jerome Powell, the Fed chairman, has announced several times that US interest rates would remain high. Jerome Powell’s story is very interesting in this regard. A collaborator of Nicholas Brady, Bush’s senior Treasury Secretary, he joined the Carlyle Group and created his own private investment bank, before joining the Federal Reserve Board, along with Jeremy Stein, on the nomination of President Barack Obama.
Appointed by Donald Trump in February 2018 to chair the Federal Reserve, replacing Janet Yellen — considered too close to the Democrats —, he was confirmed by Joe Biden and, during his presidency, he embraced the line of fighting inflation with a restrictive monetary policy, which certainly favored the large holders of managed assets — the Big Three, in fact — removing liquidity from the markets and, at the same time, helping to support the dollarization pursued by Joe Biden himself to finance his enormous federal spending, built on debt.
High rates and geopolitics
Of course, the United States really wants to continue draining savings from around the world to finance its economy, but in order to pay such high rates in order to attract global savers, it needs the dollar to be the only global currency, accepted both in financial and geopolitical terms. From this perspective, Joe Biden has preferred the path of increased federal spending to finance the recovery of a productive domestic economy, fueled by a strong dollar, rather than a competitive dynamic facilitated by lower interest rates.
For this reason, too, at the NATO summit in June 2024, the possibility of Ukraine joining was proclaimed, with the immediate support of a Europe happy with its Atlanticism that imposes the dollar as a means of financing the United States, at the expense of the Europeans. If the United States flexes its muscles and the European “allies” fall into line, the dollar will continue to be the only currency in the West, and the American economy will be able to produce again, instead of being driven only by paper.
However, rating agencies, owned by large funds, have downgraded the debt rating of “socialist” France because prevention is better than cure. NATO, rating agency bulletins and aggressive foreign policy are three key elements of the Democratic “model”, which cannot admit any form of isolationism and must pursue global military primacy, according to statements by Kamala Harris herself.
Donald Trump's hostility towards NATO is, on the contrary, a sign of a plausible political opposition to the Democratic project, and expresses the idea that the military alliance cannot be used for economic and monetary purposes, for which other strategies would be necessary. The Republican candidate, in Nashville “Digital Miners” Conference, declared his support for bitcoin and cryptocurrencies, announcing the establishment of a strategic reserve and a Presidential Council on the subject.
He argued, changing his old positions, that cryptocurrencies can represent a resource for the American economy, capable of protecting the dollar itself from the risks of progressive international abandonment. Donald Trump does not like the Federal Reserve's high interest rate policy, which generates a dollar that is too strong for the exports of American-flagged companies, burdened by the cost of credit, and which run the risk of limiting the spread of the dollar, because it is excessively burdensome for its users, especially in emerging countries.
Donald Trump and the project of a new North American monetary centrality
From this perspective, the bitcoin and cryptocurrencies become not just an object on which to build speculative operations, perhaps led by investment funds hedge close to Donald Trump himself, but also a means to define a new, more “ideologically” popular and anti-state monetary instrument, which can maintain American monetary centrality, moving it to the digital level.
In this sense, Donald Trump wants to “Americanize” cryptocurrency and, consistent with a similar attitude, he made it known that he will not put back into circulation the cryptocurrencies seized by federal authorities, which total almost nine billion dollars, to constitute the aforementioned strategic reserve and avoid shocks to the approximately 50 million Americans who hold this type of asset.
Most of all, he declared that he will replace the SEC directors (Securities and Exchange Commission), the stock exchange supervisory authority, starting with Gary Genser, who has always been hostile to this type of payment instrument. Donald Trump himself has also mentioned the possibility of logistically linking highly energy-intensive AI systems with digital miners, to optimize the exploitation of energy peaks that would otherwise be dispersed, while at the same time fighting for world leadership in AI and mining.
Along the same lines, Donald Trump indicated that government purchases of bitcoin should reach 4 or 5% of the total available volume. The strategy of stablecoins also puts itself in a similar perspective: companies that issue stablecoins pegged to the dollar must buy the equivalent in US government bonds. Thus, by replacing the Eurodollar circuit with that of stablecoins, the United States would, in fact, regain control of this monstrous monetary mass of dollars spread across the globe, which is now predominantly controlled by the stock markets.
Such a clear position can be read as yet another controversy of unbridled capitalism against the Big Three who use bitcoin to create ETFs, but have always shown great distrust towards the general crypto scene, because the bitcoin and cryptocurrencies would reduce the liquidity monopoly held by the Big Three themselves, thanks to managed savings.
The multiplication of payment instruments favors those who are outside the liquidity monopoly and opens up spaces, even in speculative terms, outside the choices of Vanguard, Black Rock, State Street and their armed wing, JP Morgan. The position taken by Donald Trump in Nashville aimed, once again, to build a consensus in relation to the Republican candidate among that large portion of Americans who did not recognize themselves in the “Democratic” model of large funds, capable of reducing risks due to their monopoly status and, therefore, capable of guaranteeing health and social security policies not supported by the State to millions of Americans.
Cryptocurrencies are part of the libertarian paradigm and the “competitive” spirit of capitalism that Donald Trump, who, supported by candidate Vance, is willing to inveigh in a patriotic tone against the Wall Street elite. It is likely, in light of this, that in addition to Gary Genser of the SEC, Trump, if victorious, will also remove Jerome Powell, precisely because of his high interest rate policy, currently fueled by a huge amount of short-term issuance, triggered to keep long-term rates high without depreciating bonds.
Thus, Donald Trump’s victory would be a true financial earthquake, institutionally motivated, which would force “the masters of the world” to deal with politics, perhaps by modifying the superior structure of financial capital; a “remodeling” necessary to face the tensions with the Chinese communist economy; something for now completely irreconcilable with the Democrat-Big Three pact.
Progressivism is not synonymous with “left”
Almost all the Italian press, including The poster, celebrated Tim Walz’s candidacy for vice president as a “left-wing” choice. This is a decidedly risky definition for a figure who is substantially aligned with Kamala Harris on economic and financial policy issues. It is no coincidence that, to corroborate this proposition, the Italian media cited Donald Trump’s statements and the support of an increasingly confused Bernie Sanders.
The real issue is that for the Italian press “left” is a strict synonym for “progressivism”; a category that, in fact, combines broad openings in rights and freedoms with a deep capitalist faith. Therefore, Harris-Walz vs Trump-Vance should be defined in terms of the clash between capitalisms, without introducing the term “left” and without having to mention Dick Cheney’s support for Harris, who even declared himself in favor of the fracking.
*Alessandro Volpi is a professor of contemporary history at the University of Pisa.
Translation: Ricardo Cavalcanti-Schiel.
Originally published in Out of the Series.
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